Auto Show Blues in Motown

The U.S. economy is in a skid. Auto sales are falling. Detroit's car makers are in crisis. Scrambling to prove that they'll still be alive and relevant in ten years, auto makers play up dreamy concepts for futuristic, super high-mileage GreenMobiles.

Yes, 1992. It seems like only yesterday.

The annual North American International Auto Show kicks off this week in Detroit, presenting auto industry executives with the daunting challenge of throwing upbeat messages about the future into the teeth of a howling economic storm. It's been 17 years since things have been even close to this bad in the U.S. car business.

ENLARGE

A vehicle under wraps as workers prepare Cobo Hall for the Detroit auto show.
Freers/NAIAS

Some companies, notably
Nissan Motor
Corp.
, have decided that 2009 will be such a bust that they are skipping the Detroit show altogether. The crop of new production vehicles due to make their debut in Detroit this week looks thin, and skewed toward makeovers of relatively low-volume sellers.

Ford
on Sunday rolled out a bevy of forthcoming models, including a more stylish design for its large Taurus sedan, the latest chapter in Ford's effort to revive interest in that name after years of neglect. Ford Chairman William Clay Ford Jr. sketched out Ford's plans for a global strategy &ndash; including an alliance with Chinese auto maker Changan and the city of Chongqing, to bring more electric models to market.
BMW
highlighted a hybrid 7 series sedan and X6 crossover wagon, and also unveiled a redesigned Z4 roadster and a new convertible for the Mini brand.

The press will spend most of its time this week trying to break news about efforts by GM and Chrysler LLC, fresh from their bailouts by the U.S. government, to negotiate pay and benefit cuts with the United Auto Workers and restructure their debts to bondholders.

Journal Community

The last time the contrast was this stark between auto show glitz and the real world was in 1992. Then as now,
General Motors
Corp.
faced a financial crisis. One of the Wall Street Journal's big stories out of the Detroit Auto Show week in 1992 led with the news that Moody's Investors Service Inc. had downgraded GM's debt. (I helped to write it. Memories of those days grow dim, but I have no doubt this was not the story GM's brass was hoping for that week.)

In 1992, Detroit's auto makers were floundering in the face of competition from Japanese auto makers, burdened by uncompetitive labor costs, top-heavy bureaucracies and hurt in the marketplace by their images as purveyors of technologically backward gas guzzlers.

To divert the press from the recession-pinched lineup of real cars on display, auto makers in 1992 put the spotlight on prototypes of ecologically correct cars of the future.

GM, for example, showed off a car called the "Ultralite" with a body made of carbon-fiber composite materials that company executives declared would get 100 miles to the gallon. "Very possibly this could be the compact car of the future," a GM executive told journalists.

The stars of this fractured 2009 Detroit show also will come in shades of Electric Green.

Toyota's Lexus Sunday unveiled a new gas-electric hybrid sedan based on technology similar to that used in the high-mileage Toyota Prius. The 2010 Lexus HS 250, the first "dedicated" hybrid model in the Lexus lineup, will have a four-cylinder 2.4-liter engine and an electric drive system that will deliver 187 "total system horsepower." Lexus group vice president Mark Templin told a media throng the HS 250 is expected to get better city mileage than a Smart ForTwo mini car &ndash; in other words, better than 33 mpg.

GM separately, rolled out a sleek Cadillac Converj concept coupe, a prototype powered by an "extended range" electric-drive system similar to the one being developed for the Chevrolet Volt. The system, which GM now calls "Voltec," uses electricity to drive the car all the time, and uses a small gas-fueled engine to provide backup generating power after 40 miles or so of all-electric motoring.

GM's vice chairman for product development Bob Lutz took the stage to praise the Converj's design and give a preview of GM's marketing strategy should it build the car: "Luxury can be electric, and electric can be luxury."

Weaning luxury customers off the old values &ndash; power is good, bigger is better &ndash; could be a challenge. But putting electric and hybrid propulsion systems on luxury brands makes sense. The cost premiums that come with high-tech, green propulsion are easier to cover at Lexus and Cadillac prices than at Chevy and Toyota brand prices.

Boutique car maker Fisker Automotive will drive that point home with a sleek ultra-luxury sports car powered by lithium-ion batteries and a small gasoline engine.

The 2009 Detroit show's sleeper could be Chinese auto maker BYD, which is expected to outline ambitious plans to bring its comparatively bargain priced electric and hybrid cars to the U.S. BYD, which got into the car business as an extension of its battery business, now has as its official goal to be the biggest car company in the world by 2025. Before you laugh that off, consider that one of Warren Buffett's companies recently bought a 10% stake in BYD.

Should the press and public get tired of variations on electric vehicles, there will be some more traditional automotive bon-bons. Ford will talk about its forthcoming "EcoBoost" engines &ndash; a family of higher mileage, direct-injection gasoline motors designed to advance Ford's drive to be the fuel efficiency leader in high volume segments. But then, it will show off the 540-horsepower, 2010 Shelby GT500 super muscle car.

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